The US Department of Justice asked a federal judge to deny confirmation of a bankruptcy proposal by a Property of David Tepper company linked to failed Rock Hill, SC, team headquarters project, court documents show.
The request was made on Tuesday evening by a bankruptcy court trustee on behalf of the DOJ. A confirmation hearing of the bankruptcy proposal is scheduled for November 16.
“The U.S. Trustee is asking the Court for an order denying confirmation of the Plan and granting such other relief as the Court deems just and appropriate,” the Trustee wrote.
It’s unclear whether the request made by federal officials will impact the confirmation expected next week in Delaware bankruptcy court. Judge Karen Owens did not respond to the request.
GT Real Estate is the company created by Tepper to develop the headquarters in Rock Hill. Construction was halted last March and GT Real Estate filed for bankruptcy in June.
York County and the Town of Rock Hill are not money assured under GT Real Estate’s bankruptcy plan. City and county officials say they owe more than $100 million.
Other contractors, who together owed at least $60 million, generally accepted GT Real Estate’s proposal, which would pay the contractors much of what they claim.
York County and Rock Hill have lawsuits pending against companies owned by Tepper over the failure of the project.
GT Real Estate, York County and Rock Hill have yet to file a written response to the federal government’s denial request. Efforts by The Herald to reach attorneys for GT Real Estate, York County and Rock Hill for comment were unsuccessful.
The plan would give releases, eliminate claims
GT Real Estate’s proposed plan would remove claims against the Tepper companies and release the other Tepper companies, without the consent of the claim holders. Debtholders would potentially have no voice in the process, according to the DOJ administrator.
“Neither the plan nor the solicitation procedures provided any means for debt holders to avoid giving such releases,” the trustee wrote.
The proposed bankruptcy plan would put York County and Rock Hill in a class of claimants where there is no guarantee money will be returned, according to testimony and court documents.
Last week, Owens, in a court order, gave York County a temporary stake of $81 million because the county and the town of Rock Hill risked being left without a voice in the bankruptcy case. The city has a voting stake of $20 million.
Vote shares in bankruptcy cases are allocated proportionately based on claims of what is allegedly owed. Without a vote, York County and Rock Hill would have faced the possibility of never recovering any money, pending the results of other lawsuits. Those with grievances will vote to uphold GT Real Estate’s bankruptcy proposal.
“I am concerned about the danger of county and city disenfranchisement,” Owens said at the time during a court hearing. “It is appropriate that they have the floor.”
York County alleged in court papers that GT Real Estate and other Tepper companies misused $21 million of county taxpayer money for the project. Rock Hill alleges fraud and dishonesty in its lawsuit against GT.
What is the role of a trustee in bankruptcy?
According to the US Department of Justice, a trustee is appointed in bankruptcy cases to ensure that cases are handled for the benefit of all involved, including taxpayers.
“The United States Trustee Program is the component of the Department of Justice responsible for overseeing the administration of bankruptcy cases and private trustees,” the DOJ website states. “We are a national program with extensive administrative, regulatory and litigation/enforcement authorities whose mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors and the public. “
A trustee in the case voiced objections months ago when the bankruptcy plan was in its early stages, but the plan has continued to move toward a vote by creditors.
What happens now?
The fight continues to see who will be paid.
- A hearing on confirming the bankruptcy plan is scheduled for Nov. 16, according to court documents.
- Creditors – companies that say they are owed money from the failed project – are expected to vote Nov. 16 on GT Real Estate’s proposed bankruptcy.